India to grow at 7.2% in FY17-18, says World Bank

 BT Online   New Delhi     Last Updated: June 5, 2017  | 18:45 IST
India to grow at 7.2% in FY17-18, says World Bank

A recent World Bank report predicted that Indian economy will maintain a growth rate of 7.2 per cent in the current financial year. This report came close on the  heels of Q4 GDP figures for 2016-17, which saw growth rate plunging to 6.1 per cent due to disruptive effect of demonetisation.

In its Global Economic Prospects, the World Bank estimates India to see growth rates of 7.5 per cent in 2018-19 and 7.7 per cent in 2019-20. According to this, India retains the title of fastest growing economy, with China still lagging behind.

As for the neighbouring superpower, the World Bank pegged the growth rate at 6.5 per cent during 2017-18, like the previous year, and 6.3 per cent for 2018-19 and 2019-20.

However, the World Bank revised India's growth figures by 0.4 percentage points against its January prediction. Predictions for the coming two fiscals have also been downgraded by 0.3 per cent and 0.1 per cent.

India's economy in 2016 was buoyant from favourable monsoon that supported agriculture and rural consumption, rise in infrastructure spending, and robust government consumption, the report said. This was before demonetisation, though.

"In India, recent data indicate a rebound this year, with the easing of cash shortages and rising exports. An increase in government spending in India, including on capital formation, has partially offset soft private investment," the report said.

"In India, recent data indicate a rebound this year, with the easing of cash shortages and rising exports. An increase in government spending in India, including on capital formation, has partially offset soft private investment," the World Bank report said.

"While manufacturing Purchasing Managers' Indexes have generally picked up, industrial production has been mixed," it said.

The decline in growth rates projected earlier shows that private investment recovery is taking longer to recover from demonetisation was expected earlier, the World Bank stated in its report.

"Nonetheless, domestic demand is expected to remain strong, supported by ongoing policy reforms, especially the introduction of the nationwide Goods and Services Tax (GST)," it said.

"Significant gains by the ruling party in state elections should support the government's economic reform agenda, which aims at unlocking supply constraints, and creating a business environment that is more conducive to private investment," the Bank said.

The World Bank also predicted that the global economy will grow at 2.7 per cent, however, 'substantial risks cloud this outlook', the Bank stated.

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